ABOUT TOMORROW WITHOUT FEAR

In 1946, Chester Bowles–advertising executive, director of the Office of Price Administration during World War II, and popularizer of the soap opera–published a remarkable pamphlet about the coming transition to a peacetime economy. In clear, optimistic prose he explained the economics of what had gone wrong in the Great Depression and why the United States had been able to awaken its productive capacities during the war.

Most importantly, Bowles outlined the choice between shared affluence and isolated stagnation that America would face as it demobilized from WWII. As a country we had to decide whether to shut down the factories and workshops from the war, whose ships and rifles were no longer needed, or repurpose them to peacetime uses, finding new products to make and allocating to consumers the purchasing power to keep workers employed.

We chose the latter, and the results largely confirmed the expansive optimism and confidence in his fellow Americans that saturate Bowles’s writing. Over the years the ideas in Tomorrow Without Fear have fallen out of circulation, and the book itself has been all but forgotten. But today its message of full employment underlain by broadly shared purchasing power–and its confident outlook–are more necessary than ever.

THE MESSAGE

Every economy rests at the intersection of supply and demand. If there are too few workers or too little capital to produce all the goods a nation needs, its economy will stagnate. But stagnation comes just as quickly if there is insufficient demand–if the people who need things don’t have the money to purchase them. A stable economy requires a broad distribution of purchasing power, with people at all income levels making enough to afford the day-to-day necessities that are least subject to fads and cycles.

Mainstream economists have known since Keynes that a slowdown in aggregate demand will lead to recession. But there is a secular as well as a cyclical component to this pattern: unless technological progress is coupled with rising incomes, productivity increases themselves contain the seeds of future unemployment, because they increase the capacity to produce beyond what stagnant incomes can purchase. If wages rise with productivity, technological unemployment is avoidable. If they don’t, it isn’t.

But the more fundamental point Bowles makes–since confirmed by scholars in history, economics, and psychology–is that economic stability underlies political stability. As he put it, “The world must move forward to greater and greater economic security because without it there can be no durable peace.” When people are struggling to make ends meet, they lack the bandwidth to keep their leaders accountable. At the same time, they can be tempted to take actions they would typically shun to secure the prosperity they deserve.

WHY NOW?

America finds itself today in a situation similar to that of the 1930s and 40s. Faith in our free enterprise system is shaken, because that system has been performing badly. As in the 1920s, productivity has been rising without corresponding increases in earnings, and just as it did then this has made it difficult to sustain full employment. The result has been decades of economic stagnation punctuated by the occasional asset bubble or financial crisis.

Nothing could be further from the experience of the US at midcentury, when the country was united around an economic program largely following the principles Bowles lays out. At its most basic level, a functioning market economy requires that people have the resources to buy the goods they are producing. That’s the foundation of the mutual benefit system that is free enterprise at its finest. Bowles described this clearly, without pretension, in terms that can resonate with everyone.

EXCERPTS FROM TOMORROW WITHOUT FEAR

“In 1940 every group–our farmers, our workers, and our businessmen–suffered from lack of good paying customers for the goods or services it had to sell. Lacking enough good customers, each group found itself financially unable to go on producing to capacity. So incomes remained low and workers were unemployed. All these groups–our farmers, businessmen, and workers–were each other’s chief and almost only customers… Each could have had a better income and itself been more prosperous and more secure if the others had been more prosperous and secure…This was the baffling paradox of the times, the inability of people on every hand to find markets for the goods that people on every hand so badly needed!”

“For my part, I have not the slightest doubt that in the future our annual productive capacity will not only equal but will far exceed 400 billion dollars. If there is anything that troubles me, it is not our capacity to produce. That we know and have known throughout our modern history. What troubles me is that we may not succeed in learning how to use our productive capacity to raise our standards of living, to lighten the burden of toil for all of our people…Our productive capacity is going to grow year by year. If we can’t grow up to it, grow up with it, learn to use it, the very achievements of our science and technology will be our undoing. And what could be more ridiculous!”

“When trouble came in the early thirties, there was plenty of talk that the free-enterprise system was doomed, that it couldn’t work, that it had to be changed. But did we change our system? No, we changed the administration of our government instead. This is a tribute to the good sense of the American people. They rightly put their finger on where the trouble lay. That is where they changed things…The people of this country want the free-enterprise system, but they want it to work. And they know where the final responsibility lies for making it work….They know that final responsibility for the general welfare, for making our system work for all of us, must rest on all of us through our government.”

“The problem of 140 million people learning to live better and better year after year sounds easy and pleasant. But strangely enough we shall probably find it a somewhat difficult task. It will be difficult because what it requires is that we get a lot more purchasing power–in other words, a lot more money–out into the hands of a lot more people…This means a different distribution of our national income than we’ve had before. And the redistribution of income is a subject which many people find distasteful to talk about–much less to do something about. But talk about it and do something about it we must, because this is not a matter of taste; it is a matter of national economic necessity.”

“Let us suppose that one per cent of the population were to receive 95 per cent of our entire national income, with the remaining 5 per cent spread among the rest of us. Could our system—could any system—work on that basis? One per cent of the people couldn’t possibly consume 95% of all the goods and services which the rest of us could produce…[This case] demonstrates the nonsense of the contention that the way our national income is divided among us has nothing to do with how much we produce or how many of us have jobs. On the contrary, the distribution of our annual income has almost everything to do with our total production and employment.”

“In this full-employment economy, there will be jobs and opportunities for all. That means that the haunting dread of unemployment–of no income at the end of the week to keep the family going–will be lifted from every corner of our land. It means that no mother’s heart will ache hopelessly because her child is undernourished and there is no food, or because he is ill and there is no doctor. In such a nation, moving ahead to new levels of prosperity, freedom will come to lose the empty sound it has held for impoverished millions…We–140 million of us–shall then at last truly be good neighbors, free from want and free from fear.”

We’ve also lost the faith in America that is so clear in Bowles’s writing. Today a third of the country wants to go back to a time when America was great, and the rest can’t figure out whether America is already great or was never great. Meanwhile, infighting has prevented us from solving our common problems, from terrorism to climate change. It’s worth revisiting the spirit that animated an age when the country decided to double its standard of living in 20 years, and then did. The United States remains capable of being the most courageous, generous, and resourceful nation in the world, and we should remember that.

READ TOMORROW WITHOUT FEAR

Seventy years after it was written, Tomorrow Without Fear is more timely and relevant than its author could possibly have feared. At a moment when its lessons are more needed than ever, we now present Tomorrow Without Fear in digital form for the first time.